Over 23 million Nepali people -- and Nepal's friends abroad -- were stunned early Tuesday when King Gyanendra dismissed the multi-party Sher Bahadur Deuba government, imposed a state of emergency and formally took charge of Nepal's affairs.

The shock was expected. After formally stepping in on October 4, 2002 when he sacked Deuba for the first time, the king had been experimenting with different multi-party governments.

Last year, he reinstalled Deuba as the new premier, 18 months after he sacked him.

Two months ago, government spokesperson, Information and Communication Minister Dr Mohammad Mohsin, had warned that an 'authoritarian regime' would be at the helm soon should Deuba failed to hold elections.

Yet the full-fledged royal takeover -- reminiscent of a similar takeover by Gyanendra's father, the late King Mahendra, back in 1960 -- had not been expected this early.

In a nationally-televised address, a grim monarch accused the government of failing to restore peace and take steps for the conduct of parliamentary elections.

He had therefore decided to constitute a council of ministers under his own chairmanship, which will be responsible for holding elections and ensure the return of democracy within three years, he said.

'I have decided to dissolve the government because it has failed to make necessary arrangements to hold elections by April and protect democracy, the sovereignty of the people and life and property,' Gyanendra said.

'I have exercised the rights given to the crown under the present Constitution (of the kingdom of Nepal 1990) and dissolved the government for the larger interests of the people, country and protection of sovereignty.'

But the big question is will the king be able to do what his hand-picked prime ministers failed to do -- make peace with the Maoists fighting to overthrow the monarchy and organize local and parliamentary elections to ensure a smooth transition to democracy?

They believe the latest developments have in fact thrust Nepal into a deeper crisis, which has the king and his army on one side and the deeply divided parliamentary parties on the other. Then there is a third force -- a growing Maoist revolt that has affected virtually every nook and corner of the Himayalan kingdom.

There are now two possible scenarios being predicted.

In one, the king will get the Royal Nepalese Army to launch operations against Maoist guerillas -– while winning the hearts and minds of the war-ravaged population -- and put pressure on them to return to the negotiating table.

In their recent statements, leaders of the Nepal Communist Party (Maoist), Prachanda, also known as Puspa Kamal Dahal, and Dr Babu Ram Bhattarai adamantly reiterated that 'Now we don't want to talk to Deuba, or anybody, but the king himself.'

In the second possible scenario, the deeply divided political parties join hands with the rebel Maoists and form a united front against the monarchy to establish a republic in Nepal.

Which, if and when it happens, would mean a crisis for the monarchy itself.

There are pressing reasons to speed up attempts to seek an early resolution to the bloody Maoist revolt that will enter its ninth year February 13.

Since the People's War -- launched in 1996 by the Communist Party of Nepal (Maoist) -- intensified in 2001, bloodbaths have become normal across the length and breadth of Nepal.

'India has consistently supported multiparty democracy and constitutional monarchy enshrined in Nepal's constitution as the two pillars of political stability in Nepal,' said a statement read out by Ministry of External Affairs spokesman Navtej Sarna.

'The principle has now been violated with the King forming a government under his chairmanship.'

Soon after the news reached New Delhi early on Tuesday, an emergency meeting was held between Prime Minister Manmohan Singh and Foreign Minister K Natwar Singh. For nearly an hour, they were briefed about the situation in Nepal by Foreign Secretary Shyam Saran, who was till recently India's envoy to Kathmandu.

New Delhi also said 'the safety and welfare of the political leaders must be ensured and political parties must be allowed to exercise all the rights enjoyed by them under the Constitution.'

'We will continue to support the restoration of political stability and economic prosperity in Nepal, a process which requires reliance on the forces of democracy and the support of the people of Nepal.'

There are pressing reasons for this position. India, which shares not just a border but a common spiritual and cultural heritage with Nepal, has consistently supported multiparty democracy and constitutional monarchy enshrined in Nepal's constitution as the two pillars of political stability in Nepal.

New Delhi has supported the government's war against Maoist insurgents by providing helicopters, guns and other assistance to the Royal Nepalese Army.

Hours after the formal official royal takeover of Kathmandu, leaders of all major political parties -- like the Girija Prasad Koirala-led Nepali Congress, Deuba-led Nepali Congress (Democratic), Madhav Nepal-led Communist Party of Nepal - United Marxist Leninist, Narayan Man Bijukchhe-led Nepal Workers and Peasants Party etc -- were reportedly placed under house arrest.

The reports could not be independently verified as the telecom and Internet networks in the Himalayan kingdom were either over-burdened or deliberately shut down.

'The king took a wrong step, our democracy has suffered a huge setback,' Nepali Congress leader Shailaja Acharya told an Indian television channel.

'We don't know what to do. All the telephone lines are dead, and I am not being able to contact any of our leaders.'

Bollywood actress Manisha Koirala, grandchild of the late Bishweshwor Prasad Koirala, Nepal's first elected prime minister, expressed shock at the developments in Nepal in a brief television interview. However, she added that 'the king was trying his best to hold elections. And there are these Maobadis. Now we must give support to the king.'

All the leading media outlets -- private and state-owned -- in Nepal were taken over by the security forces immediately after the king's announcement. They will now need official approval before publication or transmission of any news or commentary.

"Our situation is quite chaotic and confusing," one journalist wrote in an e-mail from Kathmandu. "There are army and police personnel in our office, on the streets, everywhere."

In his televised address, the king attacked the political parties for 'indulging in factional fighting,' and said, 'in fact, all the democratic forces and political leaders should have united to protect the country's democracy, national sovereignty, people's life and property and also protect the country's economic infrastructure.'

'Innocent children were found massacred and the government could not achieve any important and effective results. The crown traditionally is held responsible for the protection of national sovereignty, democracy and also people's right to live peacefully. It is the duty of the crown to protect all these segments of society.'

But it remains to be seen how King Gyanendra as chairman of the new council of ministers handles the delicate situation in the conflict-wracked Himalayan kingdom, reeling from the day-to-day atrocities of the warring forces.

More will be clear after King Gyanendra embarks on a goodwill visit to India -- cancelled at the last minute after former prime minister P V Narasimha Rao's death last month -- and speaks his mind to the top Indian leadership.

Surendra Phuyal is special correspondent of Nepal's Kantipur Media Group in New Delhi. He can be reached at surendra@kantipur.com.np or surendraphuyal@rediffmail.com